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Rhode Island Supreme Court Rules Engineer That Prepared Documents For Public Bidding Did Not Owe Duty To General Contractor

In John Rocchio Corporation v. Pare Engineering Corporation, 2019 WL 575822 (R.I. Feb 13, 2019), the Warwick Sewer Authority (“WSA”) contracted with Pare Engineering Corporation (“Pare”) to provide pre-bid services, including preparing a Request For Proposal (“RFP”) to be provided to general contractors submitting bids.  Pare completed the RFP and WSA received bids from five companies.  John Rocchio Corporation (“Rocchio”) submitted the lowest bid and DiGregorio, Inc. (“DiGregorio”) submitted the second lowest bid.

After the bid, Pare reviewed the bids and provided recommendations to Janine Burke-Wells, the executive director of the WSA.  Pare noted that Rocchio omitted certain required EPA forms, which could disqualify Rocchio.  Pare also noted Rocchio had previously worked for WSA, which could be factored into the final decision.  Otherwise, Pare stated it was “not aware of any reasons why the Contract should not be awarded to either [Rocchio] or [DiGregorio].” 

Burke-Wells then recommended to the WSA board that Rocchio’s bid be rejected and the contract awarded to DiGregorio.  WSA noted the omitted EPA forms and a concern that Rocchio’s past work for the WSA resulted in conflicts over change orders and increased project costs.  

Rocchio sued Pare for negligence, interference with prospective contractual relations, and breach of contractual obligations owed to Rocchio as a third-party beneficiary of the contract between the WSA and Pare.  Rocchio argued it was an intended third-party beneficiary of the contract between WSA and Pare and therefore, Pare owed it a duty to properly prepare the RFP and fairly evaluate the bids.  Pare moved for summary judgment, arguing the award to DiGregorio was based on the recommendation of Burke-Wells and the vote of the WSA board, not its Report.  Pare maintained it did not intentionally interfere with Rocchio’s prospective contractual relations, pointing out that it had no interest in which company was ultimately awarded the bid. 

Summary judgment was granted in favor of Pare and the Supreme Court of Rhode Island affirmed.  The Court found that Pare did not owe a duty to Rocchio and in doing so, distinguished the case from a previous ruling in Forte Brothers, Inc. v. National Amusements, Inc. 525 A.2d 1301 (R.I. 1987).  In Forte, the Court held an engineer could be liable to the general contractor based on the contractor’s reliance on the engineer’s performance of its contractual duties to the owner.  However, in Forte, the alleged negligence occurred after the all three parties – the owner, the engineer, and the contractor – were in place.  Further, in Forte, the Court found the engineer and the general contractor had interrelated contracts with the owner.

The Court also distinguished Rocchio from Forte, in part, on the basis, the identity of the general contractors who may submit bids is not foreseeable.  The Court ruled, “a determination that Pare owed a duty to Rocchio under the circumstances present in this case would effectively be a determination that all engineers contracted by project owners owe a duty to all general contractors that could possibly submit a bid on any given request for proposal.”  The Court called this, “an absurd result.” 

The Rhode Island Supreme Court’s ruling distinguishes circumstances in which a project engineer may be held liable to a general contractor, despite an absence of privity of contract, such as when they are both contracted by an owner and working on the same project.  However, in situations where a general contractor is an unidentifiable and unforeseeable third party at the time of the alleged negligence, it does not appear that a duty will lie in Rhode Island.